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CGS CIMB |
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REITS Standing The Test Of Time; Keep OVERWEIGHT
Stay OVERWEIGHT; accumulate undervalued gems – Top Picks: Suntec REIT, ESR REIT, Manulife US REIT. SREITs recovered from March lows (+22% from bottom) as investors bottom fish for yields amidst an uncertain outlook. While REITs are expected to undergo near-term pain from sharply lower economic activity, the impact should be mitigated by locked-in leases and diversified portfolios. Amidst a hazy outlook and rapidly changing market conditions, we recommend investors to slowly accumulate undervalued REITs with strong sponsor backing, quality assets and operational track record.
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Keppel Corporation Essential portfolios in infrastructure
■ KEP’s infrastructure division could be a driver this downturn with its portfolio of essential assets – power plants, data centres, waste management, etc. ■ The division announced a S$1.5bn integrated waste management contract together with a 48%/31%/21% consortium with STE and China Harbour. ■ KEP’s Tianjin Eco City also announced the first land sale in 2020 for Rmb1.174bn, for which we estimate a profit of c.S$30m. Reiterate Add
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CGS CIMB |
UOB KAYHIAN |
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Keppel REIT Stable 1Q20 DPU
■ 1Q20 DPU of 1.4 Scts within expectations at 24.3% of our FY20F forecast. ■ Positive rental reversion in 1Q20, momentum likely to slow from 2Q. ■ Reiterate Add with a lower DDM-based TP of S$1.20.
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Parkway Life REIT (PREIT SP) 1Q20: Buffer Set Aside For Rainy Days. Sound Financial Management
PREIT reported good 1Q20 results with gross revenue and net property income expanding 5.2% and 4.5% yoy respectively on organic growth of 1.6% for hospitals in Singapore and contributions from three nursing homes acquired in 4Q19. It has set aside S$1.7m to provide targeted assistance and support measures for tenants affected by the COVID-19 pandemic. PREIT is a beneficiary of an ageing population and growth in healthcare. It is a defensive anchor with WALE at 6.4 years. Maintain BUY. Target price: S$3.78.
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Check out our compilation of Target Prices
